Publication Date

Spring 4-11-2011

School

School of Business

Major

Business: Finance

Primary Subject Area

Business Administration, General

Disciplines

Business Law, Public Responsibility, and Ethics | Corporate Finance

Abstract

The purpose of this study is to evaluate the arguments concerning corporate social responsibility (CSR). The two sides of the debate are stakeholder theory and shareholder theory. Proponents of stakeholder theory support providing for the discretionary expectations of society. On the other hand, advocates of shareholder theory maintain that businesses should simply obey the law and maximize shareholder wealth. Although CSR is enthusiastically espoused by many social progressives, it is not a panacea for society’s ills. The conclusion of this study is that corporations should focus on legally maximizing shareholder wealth based on ethical principles. CSR should only be pursued if doing so accomplishes this function.